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Three men and two women in white chairs around a silver coffee table. The words "Consensus 2017" are on a large white panel behind them.

Enerchain: A Decentralized Market on the Blockchain for Energy Wholesalers

Updated 25 May 2017

Enel, a multinational utility, is teaming up with Ponton, an enterprise software provider in Germany, to develop a decentralized market for energy wholesalers in Europe. Diego Dal Canto, an innovation manager at Enel, spoke about the Enerchain project, yesterday afternoon at the the blockchain-focused Consensus conference in New York City. 

The goal of Enerchain is to create a blockchain-driven exchange that provides energy wholesalers with a way to list and sell expected future energy generation.  

Dal Canto estimates that Ponton will deliver a prototype by this summer, and a functioning beta application by the end of the year. There are already more than 20 European traders signed up to use it, he says. 

By listing and clearing exchange transactions on a blockchain, Enerchain has the potential to eventually obviate the software programs that currently mediate sales. These platforms, which typically charge fees for each sale, slice into the profit of energy traders. They also sequester valuable trading data behind proprietary walls. A decentralized market might recoup revenue for European energy providers while making pricing data available for anyone to see. 

“The beauty would be to open the market to smaller players,” says Dal Canto. 

However, the market is primarily intended to serve as a research project. Dal Canto, who shared the stage yesterday with a panel of blockchain enthusiasts, stood out as a conservative voice. After the event, he explained that he struggled to see use cases for blockchain technology in the energy sector.

For example, the oft-repeated idea that a blockchain should be used to coordinate sales between individual, residential producers of renewable energy, is much more complicated that it may seem, says Dal Canto. 

“When it comes to smaller and even residential customers, there are many issues,” he says. “What about forecasting of consumption and generation. If you want to offer one kilowatt-hour generated tomorrow at five and you offer that and someone buys, you have to actually deliver. There is an issue of the physical delivery.”

The wholesale traders who will use the Enerchain exchange may be able to deal with that kind of risk. But it will be a rougher ride for people listing smaller sales. 

While some startups are rushing into the blockchain space with elaborate schemes for disrupting the energy sector, Dal Canto is advocating restraint. Meanwhile, he has also announced the formation of a blockchain discussion platform at Eurelectric, an association of utilities that represents 32 countries in Europe. The group will begin with an analysis of the problems facing the industry and then move forward to look for ways that blockchains can help. The intention is to devise one strategy that unites as many people in the space as possible.

“We don’t have to make the mistake of reinventing the umbrella,” he says. 

Editor’s note: Diego Dal Canto’s name was originally misspelled as Del Canto. IEEE Spectrum regrets the error.

photo-illustration of light bulb

Will Energy Offer the Next Market for Blockchain?

Electric devices that operate at what is sometimes known as the edge of the power grid—devices that range from electric vehicles to rooftop solar arrays—could help upend the utility business model and further decentralize energy production. Helping  in that process is a tool more familiar to accounting wonks than to power producers: blockchain ledgers.

The digital tool first gained attention as a driver behind the global rise of bitcoin applications, and it’s gaining notice across the energy sector.

In early May, 10 energy companies in Asia, Europe, and the United States said they would chip in a total of US $2.5 million to seed the Energy Web Foundation, a nonprofit whose mission is to accelerate the commercial deployment of blockchain technology in the energy sector.

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Rex Tillerson used the melting Arctic to defend U.S. involvement in global climate policy

Energy Policy Defies Jobs-Versus-Environment Rhetoric

U.S. President Donald Trump called health insurance an “unbelievably complex subject” when Congress was debating health care in February. "Nobody knew health care could be so complicated,” said Trump as Republicans in Congress struggled to find consensus on how to repeal and replace the Affordable Care Act. Given developments in Washington, D.C., over the past week, he could soon be issuing similar tweets about unimagined intricacies in energy policy—intricacies with critical implications for technology developers.

Last week's main affair in Washington, of course, was Trump's firing of FBI director James Comey, and the ensuing 'political firestorm'. But two big energy issues were also playing out, exposing policy rifts among Republicans—cracks that that could ultimately shift the course of U.S. and global policy. 

One momentous event was the Republican-led Senate’s failure to pass the override of Obama-era methane regulations that House Republicans approved in February. The second was the hardening of a split among top Trump officials over U.S. participation in the Paris Agreement on Climate Change.

Both cases show energy policy—and its environmental drivers—to be richer than the jobs-versus-environment caricature painted by Trump and Republican leaders in Congress. Knocking down existing policies inherited from prior administrations to deliver on political promises—rather than carefully improving them—comes at a price that some members of Trump’s party and even his administration are not willing to accept. 

Mark Boling, a supporter of clean energy and climate action, makes that case forcefully. Boling, an executive vice president at the Houston-based natural gas producer Southwestern Energy, opposed the legislative attack on methane regulations pushed by GOP leaders in Congress. “It was too blunt,” says Boling.

The targeted regulations, finalized in 2016 by the U.S. Bureau of Land Management, specify royalty charges, monitoring requirements, and emissions controls for methane vented or flared by oil and gas producers at sites on federal lands. The rules are defended by environmental groups fighting to slow climate change (because methane is a potent greenhouse gas), by local leaders grappling with local air pollution exacerbated by methane releases, and by taxpayer advocates bemoaning lost royalties from wasted methane. 

The Congressional resolution would have scrapped the rules and prohibited the agency from issuing new rules that were “substantially similar.” It was pushed forward by oil and gas producers, who saw the rules as an unwarranted drag on their industries. 

Last week was the dramatic showdown. It was the Senate’s last chance to use a streamlined procedure to scrap rules approved under President Obama, and Vice President Mike Pence was on hand in case the GOP’s vote count was off and there was a tie vote. Instead, the Senate defeated the methane rollback 51-to-49. Arizona Senator John McCain cast the surprise 'no' vote, joining two other Republicans and all of the Senate’s 48 Democrats. 

The Trump Administration will now review the rule, as Trump instructed EPA to do with related rules governing methane releases on new oil and gas sites nationwide in a sweeping executive order last month. Boling has strong ideas for how to improve the existing rule to get more emissions reduction at lower cost. “It clearly has flaws,” he says.

One flaw is what Boling calls its “prescriptive specifications” for methane leak detection and repair programs, which he predicts will slow the commercialization of novel sensor technology. Boling favors a performance-based approach whereby the Bureau of Land Management (and the Environmental Protection Agency) would set a ceiling on allowable methane releases and then set oil and gas producers free to meet it. 

He predicts producers will be empowered to press novel technology into service faster. Examples include drone-based methane detectors (which General Electric is working on), or small tuneable diode lasers for 24/7 onsite monitoring (being developed by IBM and Quanta3). Using such advanced technology, says Boling, will accelerate the identification of so-called super-emitters—the 10-20 percent of oil and gas sites releasing 90 percent of the methane—and thus slash emissions faster. 

A similar argument over the merits of policy improvement versus abandonment surrounds U.S. involvement in the Paris agreement. Pulling out of Paris was part of Trump’s campaign rhetoric, along with his assertions that climate change was a hoax. But concern about damage to various U.S. interests has fueled debate amongst key members of Trump’s team.

EPA Administrator Scott Pruitt and Trump policy advisor Steve Bannon want the president to follow through on his campaign pledge, calling Paris a “bad deal” for the U.S. Others, including Energy Secretary Rick Perry, Secretary of State Rex Tillerson, and the President’s daughter Ivanka advocate staying in so the U.S. can help steer global climate policy. 

The Paris “foes” had “gained the upper hand” early this month, according to the Washington Post, when a decision seemed imminent. But last week, that decision was deferred, and Tillerson took full advantage. On Thursday, he signed on to an agreement among Arctic nations (the Fairbanks Declaration of 2017) that refers to the human causes and severity of climate change and also cites the Paris Agreement. 

Business leaders, meanwhile, are speaking out in greater numbers against a Paris pullout, including top executives from the energy industry: 

  • General Electric chairman Jeff Immelt told a Georgetown University audience this month that the deal is a big business opportunity, reminding the students that GE operates a $12 billion renewable energy business. (Immelt also stated categorically that “climate change is real.”)
  • Colin Marshall, CEO of coal firm Cloud Peak Energy, wrote Trump last month arguing that he can best support the coal industry by staying in. For example, the Paris rules could determine the global acceptance of carbon capture and storage, which could ultimately make or break coal’s fate.
  • Last week, two dozen major firms financed ads in the New York Times, Wall Street Journal and the New York Post that “strongly urge” Trump to stick with Paris. Signatories include Google, Intel, utilities National Grid and PG&E, and power equipment giant Schneider Electric. 

Boling says there are multiple issues at play, but he counts five big ones: science, social concerns, economic issues, environmental factors, and political calculations. All but one, says Boling, are slam dunks for staying the course: “The only possible way one could get to a ‘no’ on the Paris Agreement is under the political category.”

The critics get Paris wrong, says Boling, by viewing it as a “death march” rather than a “roadmap” for an economic marathon. As Boling puts it: “We have to move to a low carbon energy economy. The smart people will see that as an economic opportunity for those who want to get there first.” 

If other issues are any guide, the upside potential presented by global cooperation on climate change may be something important—something the President did not thoroughly analyze before his election. Trump attacked and antagonized China on the campaign trail, and has subsequently befriended Beijing in order to put pressure on North Korea. Might the climate skeptic discover similar nuance on climate change, embracing cleaner energy and the Paris Agreement to “make America great again”? 

artist illustration of people with arms raised

Consumers Express Community Values With Their Electricity Choices

graphic link to the landing page for The Full Cost of Electricity

Viewing electricity as an undifferentiated commodity, economic rational choice theory (RCT) tells us that individuals and communities will choose the lowest cost provider regardless of the source. However, there are a growing number of examples where this is not what is happening in the marketplace. Individuals or communities who adopt distributed energy, abandon incumbent utilities, and source their own low-carbon electricity, are often making judgments—and purchasing decisions—that reflect personal or community values.

In The Full Cost of Electricity (FCe-) study, our white paper (Integrating Community Values into the Full Cost of Electricity) discusses recent examples where public values impacted community decisions about local electricity supplies. The success of public policies coupled with technological advances in manufacturing and design are lowering the cost of distributed energy systems like photovoltaics, making it much more feasible for individuals to generate their own electricity.

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The incubator agency’s 2017 budget victory last week still says little about its fate in 2018

ARPA-E Survives Brush With Trump Administration Axe

When President Trump signed the continuing resolution on the 2017 U.S. Federal budget last week, the country’s energy policy—and the fate of the government’s most innovative program pushing the forefront of energy—was kicked down the road till 30 September, when the 2017 budget runs out. So, an outright victory for energy research it was not, although clearly it represented the staving off of any kind of crisis moment.

September is now the new showdown date for the future of federally-funded breakthrough energy research in the United States. And if Trump has his say, the September fight could be waged in a higher-stakes, post-filibuster, 51-votes-to-pass-a-bill Senate. (Regardless, apparently, of any consequences for Republicans when Democrats next control the White House and/or Congress.)

The U.S. Advanced Research Projects Agency-Energy (ARPA-E) is a research incubator Department of Energy office (modeled after Internet grandpère DARPA) that Trump’s budget blueprint for 2018 zeroes out. And while the fate of ARPA-E in last week’s 2017 budget squabbles (administration zeroing out of ARPA-E, followed by Congress overriding the president and instead passing a $15 million increase for the agency) might suggest Congressionally-sanctioned prosperous times ahead, it’s not just fatalism to imagine possible disaster for ARPA-E looming in the fall.

Says William Bonvillian, historian of ARPA-E and lecturer at MIT, last week was last week. And September will be September, an entirely different kind of fight for the future of the imperiled agency.

“This is one painful, complicated battle coming up here,” he says about the looming 2018 budget negotiations, which will include the question of ARPA-E's continued funding. “It’s pretty unpredictable how it’s going to go. Does the administration want to leave a very conservative stamp, cutting the federal budget and insisting on its priorities? And because it may not have Congressional support for this, will it risk a shutdown?”

It’s a mug’s game to make any definitive predictions at this point about the outcome of the 2018 budget fight. Many uncertainties still remain to be clarified about an unpredictable Republican president and his uneasy relationship with a Freedom Caucus-swayed Republican Congress, staring down possibly treacherous re-election fights in 2018.

On 3 May, a coalition of over 100 companies, research institutions, and universities circulated a letter that at least foreshadows the kind of firepower ARPA-E’s backers will be bringing to the 2018 budget fight. “ARPA-E supports ‘high-risk, high-reward’ research which has the potential to drastically alter how we make and use energy in the future,” says the letter. Its signatories include luminaries from Harvard, Duke, GeorgiaTech, the National Venture Capital Association, the Southwest Research Institute, the U.S. Chamber of Commerce, the American Association for the Advancement of Science, the American Geophysical Union, and IEEE. “ARPA-E finds innovative technologies and gives them the critical push to get to the point where industry can take over investment. ARPA-E is helping to foster groundbreaking technological innovations, including energy storage, advanced nuclear, and carbon capture and sequestration.”

Bonvillian says that the United States has, to its misfortune, already lost much of any early lead it may have enjoyed in developing the next generation of wind turbines and solar panels. As the world builds out its solar and wind farms, low priced Chinese technology is becoming entrenched in its position as the incumbent player.

However, even if China wins the race to build renewable energy generation, the next big question is who will sell the grid-scale storage to pair with the solar and wind generation capacity? The answer is still anyone’s guess.

“With this administration, you’re not going to win the argument that ARPA-E is critical on climate, but I think there is a winning argument that it’s critical on all kinds of energy technologies that the country cares about,” Bonvillian says. He adds:

And batteries are a good example—a really crucial, competitive, international battleground. There’s storage at the utility level, and also for electric and hybrid vehicles. That’s a gigantic market. Some 10 states are already starting to move on storage requirements for their utilities. If you have even a 10 percent storage capacity, you don’t have to build out to peak load. In other words, storage helps you level the loads. We’re getting technologies now for that. We’ve not had that in energy before.

So the race to determine storage for the grid of the future is on. According to Bonvillian, no other federal agency comes close to ARPA-E in supporting high-risk, breakthrough energy research that enables U.S. companies to compete with the best storage technologies from China, Germany, Korea, Brazil, and other nations.

Then, in parallel, is the question of next-generation storage for electric cars.

“We have lithium-ion batteries that aren’t good enough yet,” Bonvillian says. “We’ve got to have considerably more efficient and cheaper batteries for cars, and the range isn’t far enough. The price is too high, and no other country cares about range like we do. That’s going to be critical to the electric car story.”

Bonvillian says ARPA-E happens to sit on a breakthrough R&D niche that may affect whether or not those American batteries will be commercialized. China’s got 10 electric car companies. That’s where it’s going. And now the German companies are on this. So, the fact that chemical storage is going to be the fuel tank of the car of the future is the core of the argument to be made for ARPA-E. Says Bonvillian, “You can’t write off advances in the energy sector. They’re economically too important to the country. And if you can’t write those off, somebody better get on having a strong ARPA-E. Because you don’t have a substitute entity that does what it does.”

Two utility-scale energy storage units as deployed at a substation in California look like white and black cargo containers on cement pedestals

Energy Storage Rose From California Crisis

It’s the stuff of an action-hero movie: An accident threatens an unsuspecting metropolis. Electricity supplies face disruptions and millions are at risk of being without electricity as blackouts roll across the city. Faced with the prospect of escalating chaos, officials gather on the steps of government buildings and implore, “Who can help us?”

But let’s leave that cliffhanger for a moment, knowing that reality was not quite so—shall we say—Hollywood.

Even so, this movie-quality crisis is based in fact and has energy storage as its action hero. The increasingly mainstream zero-emission technology helped ease a real-life crisis that had all the makings of a major catastrophe.

Official records say that on 23 October 2015, a significant natural gas leak in well SS25 was detected at the Aliso Canyon natural gas storage facility in the San Fernando Valley north of Los Angeles. Repeated attempts by Southern California Gas Co., the owner, to “kill”—plug up—the well and stop the leak failed.

SoCalGas relies on Aliso Canyon to provide gas for core customers—homes and small businesses—as well as non-core customers, including hospitals, local governments, oil refineries, and 17 natural gas-fired power plants with a combined generating capacity of nearly 10,000 megawatts.

As part of a multi-part response to the crisis, the California Public Utilities Commission in May 2016 fast-tracked approval of 104.5 MW of battery-based energy storage systems within the service areas of Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E).

Those utilities, along with the Los Angeles Department of Water and Power—the nation’s largest municipal utility—provide gas and electric service to most of southern California. By the end of February 2017, seven of eight fast-tracked Aliso Canyon–related energy storage projects were online, helping the region’s energy grid regain stability.

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illustration of scale with light bulb balanced against dollar signs

How Much Does the U.S. Government Subsidize Electricity Generating Technologies?

graphic link to the landing page for The Full Cost of Electricity

Exactly what is a subsidy, who pays for them, and who benefits? Everybody in the energy business has an opinion but few people agree on any one answer. The American Petroleum Institute, an oil and gas trade association, offers a fact sheet arguing that their industry isn’t subsidized; the Nuclear Energy Institute offers an analysis that reaches contrary conclusions. Renewables either receive disproportionate largess or are underfunded, depending on whom you ask.

While these questions incite cross-talk, not cross-tabulation. But we elected to do the latter as part of a comprehensive, interdisciplinary research project called the Full Cost of Electricity (FCe-) conducted by the University of Texas at Austin Energy Institute. Our analysis of energy subsidies aims to estimate the magnitude of federal financial support offered to various electricity supply chains and technologies—gas turbines, nuclear power plants, wind turbines—from mine-mouth to wall socket.

Over the period 2010 to 2019, we identified 76 programs worth US $11 billion to $18 billion per year that met our criteria for intentionality, selectivity/preferentiality, and the potential for wealth transfer. Bottom line? In total dollars, the fossil fuel industry receives benefits comparable to that for the renewables industry, but when considering only the portion of fossil fuel support that relates to electric power, renewables receive far more support.

Different technologies benefit from different kinds of financial support, a complex arrangement that lends itself to calculations that tell only part of the story. Renewable generation is supported by direct subsidies (money for electricity) while generation from fossil fuels is supported via indirect subsidies (tax preferences on fuel production). Some would argue that subsidies need to be narrowly defined as transactional, à la money for electricity. We disagree.

Both types of subsidies reduce costs for generators—albeit in different ways. Renewables-focused subsidies like the Production Tax Credit and the Investment Tax Credit offer clear benefit to wind and solar. But tax preferences for the oil and gas industry can also alter the economics of electricity generation—for example, making fuel for natural gas power plants less expensive than it would be otherwise. Importantly, the complex nature of energy consumption means that some subsidies support electricity generators as well as transportation, home heating, and petrochemicals.

While subsidies spending on conventional technologies and renewables is commensurate today, renewables spending is forecast to accelerate. Ongoing spending for renewables is forecast to rise from $3.5 billion in 2010 to more than $10 billion in 2019. “Shovel ready” jobs and one-off rebate programs provided as part of the American Recovery and Reinvestment Act of 2009 (an Obama era stimulus bill) added billions more in temporary funding.

Chart shows Total Spending on Electricity by Fuel and Year
Image: UT Austin
Total Spending on Electricity by Fuel and Year, US millions of dollars, nominal

On an energy basis, wind and solar receive orders of magnitude more support than their conventionally fueled brethren (see chart below). Depending on the year, conventional technologies receive less than $2 per megawatt-hour. By contrast, wind received $57/MWh in 2010, falling to $15/MWh over our study period. Astonishingly, solar support stood at $876/MWh in 2010 but is expected to decline to $70/MWh by 2019.

All in, electricity technologies receive financial support worth $3–5/MWh. That works out to $30 to $60 per capita. The reason we estimate such relatively high financial support for wind and solar on a megawatt-hour basis (and that declines rapidly over time) is that we divide annual spending by annual generation for each fuel and technology as an “industry,” that is, not lifetime spending on a project divided by lifetime megawatt-hours from a project.

The figures for total support and support-per megawatt-hour tell very different stories. That’s the point. At the end of the day, you get what you measure, and in the case of energy subsidies, what you measure varies a lot.

Our hope isn’t to tell people what measurement is best, or what subsidies are good or bad. As with our white paper and journal article that provide a fresh take on levelized cost of electricity (LCOE), our goal is to provide a standardized benchmark to compare subsidies across the energy space as they relate to electricity.

For details of inclusion criteria, evaluation methods, and calculations, read the complete white paper “Federal Financial Support for Electricity Generation Technologies,” prepared by the University of Texas Austin Energy Institute.

Carey W. King is the assistant director and a research scientist at the University of Texas at Austin Energy Institute. Ben Griffiths is a student researcher in Energy and Earth Resources at the Jackson School of Geosciences, University of Texas. 

A grey bumpy surface

Zinc Battery Breakthrough Could Mean Safer, Lighter Cars and Smartphones

Not only could rechargeable zinc-based batteries possibly store as much energy as lithium-ion batteries, they could also be safer, cheaper, smaller and lighter, new research finds. The results suggest zinc batteries could find use in mild hybrids (microhybrids), electric vehicles, electric bicycles, and eventually, perhaps smartphones and power grid storage.

The researchers are now aggressively testing these batteries and exploring scaling up this technology. “We feel we can have a battery ready for the market by the end of 2019,” says Michael Burz, CEO of energy technology firm EnZinc in San Anselmo, Calif., which helped engineer the new batteries.

When it comes to electric vehicles, the new batteries will “be 30 to 50 percent cheaper than comparable lithium-ion systems,” Burz says.

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Can nuclear power plant operators remake the fission plants' image so that they'll be considered environmentally friendly as renewables?

Facing Threats, Nukes Work to Polish Their Green Cred

The James A. FitzPatrick nuclear power plant on Lake Ontario in upstate New York is an unattractive pair of industrial-scale boxes that house a reactor, a turbine, and a generator to create electricity. Its blunt and inflexible profile may be an apt metaphor for the challenges facing a growing portion of the U.S. civilian nuclear fleet.

The 838-megawatt, single-unit boiling water reactor has produced power for more than 40 years. But a year ago, it seemed that FitzPatrick’s days were numbered. Single-unit nukes like FitzPatrick can be expensive to run because they lack the economies of scale available to larger multi-unit plants.

Operator Entergy said FitzPatrick’s economics also were hurt by a market structure that often favors renewable energy over baseload sources like nuclear and coal.

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A series of four globes on an orange background. The oceans of each globe are progressively more red

Will Earth’s Climate Get More Sensitive to CO<sub>2</sub>? Only Better Satellites Can Say

President Trump, his top officials, and Republican leaders in Congress propose to dial back action on climate change, arguing that the scientific consensus on human induced-climate change is unconvincing. That makes resolving scientific uncertainties all the more important. A mathematical analysis published today in the journal Nature Climate Change could explain one of the hottest disputes in climate science: just how sensitive Earth’s climate is to rising levels of CO2

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